KYODO NEWS



 

The Nikkei stock index on Wednesday plummeted more than 4 percent, its third-largest decline of the year, as weaker-than-expected U.S.
manufacturing data raised concern about a U.S. economic slowdown.

The 225-issue Nikkei Stock Average ended down 1,638.70 points, or 4.24 percent, from Tuesday at 37,047.61, its lowest level since Aug. 15. The broader Topix index finished 99.78 points, or 3.65 percent, lower at 2,633.49.

Every sector on the top-tier Prime Market lost ground, led by mining, nonferrous metal, and securities house issues.

The U.S. dollar fell slightly to around the 145 yen line, as the plunge in Tokyo stocks turned investor interest to the yen, seen as a safe-haven asset, dealers said.

At 5 p.m., the dollar fetched 144.99-145.01 yen compared with 145.42-52 yen in New York and 145.93-96 yen in Tokyo at 5 p.m. Tuesday.

The euro was quoted at $1.1055-1056 and 160.29-33 yen against $1.1038-1048 and 160.75-85 yen in New York and $1.1055-1056 and 161.34-38 yen in Tokyo late Tuesday afternoon.

The yield on the benchmark 10-year Japanese government bond fell 0.035 percentage point from Tuesday's close to 0.885 percent, as investors bought the safe-haven debt following the plunge in equities.

The stock market was sharply lower from the outset, dragged down by weaker-than-expected Institute for Supply Management purchasing managers' index data for the U.S. manufacturing sector in August, released overnight, that renewed fears of a potential recession in the world's largest economy.

Heavyweight tech issues including Tokyo Electron and Advantest also took a hit following a drop in the share prices of Nvidia and other U.S. counterparts.

The Nikkei index shed more than 1,800 points to fall below the 37,000 threshold at one stage, as export-oriented issues were pressured by the yen's appreciation against the dollar, brokers said. A stronger yen reduces exporters' overseas profits when repatriated.

"There are concerns that the U.S. economy will no longer be able to make a soft landing, that perhaps it may be entering a period of stagflation," said Shingo Ide, chief equity strategist at the NLI Research Institute.

"The plunge (of the Japanese stock market) may also have included some profit-taking after consecutive record highs on the Dow Jones created a sense of optimism over the past couple of weeks," he added.

The weak manufacturing data has made some investors wary of other upcoming U.S. economic data, including jobs data for August to be released on Friday, as they gauge whether the U.S. Federal Reserve will cut its key interest rate by 0.25 or 0.50 percentage point at its next monetary policy meeting later this month, analysts said.